G.R. No. L-20063 - Philippine Resources Development Corp. vs. Republic

The Bureau of Prisons initiated a project to utilize prison labor for the exploitation of forest resources, resulting in the production of resin and logs.
In 1951, Macario Apostol entered into a contract with the Bureau of Prisons to purchase almaciga and 3,000,000 board feet of lauan logs at a price of P88.00 per thousand board feet.
Apostol secured his obligation with a performance bond of P10,000.00, provided by Empire Insurance Company as surety.
The Bureau of Prisons delivered the contracted materials, but Apostol failed to make full payment, leaving an outstanding balance of P34,015.06.

To settle his debt, Apostol delivered various materials to the Bureau of Prisons, including GI sheets, GI pipes, and black iron sheets, valued at a total of P30,436.94.
Due to a lack of supporting documentation, the Bureau did not credit these materials against Apostol's debt.
In 1955, the Republic of the Philippines filed a complaint against Apostol and Empire Insurance Company for the collection of the outstanding amount.

Apostol claimed in his answer that he had settled his account through the delivery of materials, admitting a remaining balance of P758.12.
Empire Insurance Company filed a cross-claim and third-party complaint against Apostol and his co-maker.
The Philippine Resources Development Corporation, of which Apostol was president, sought to intervene in the case, asserting ownership of the materials delivered to the Bureau of Prisons.
The trial court initially denied the motion to intervene, citing a lack of legal interest, but the Court of Appeals later reversed this decision.

The trial court ruled in favor of the Republic of the Philippines, ordering Apostol to pay the outstanding amount and absolving Empire Insurance Company of liability.
The court also ordered the Republic to return the value of the properties delivered by Apostol, or to pay the equivalent sum if return was not possible.

Both the Republic and Apostol appealed the trial court's decision, but Apostol's appeal was dismissed for abandonment.
The Court of Appeals affirmed the trial court's ruling regarding Apostol's payment obligation but reversed the dismissal of the complaint in intervention.
The appellate court ordered Empire Insurance Company to pay jointly with Apostol for any unpaid balance, after crediting Apostol for the value of the delivered materials.

The Supreme Court acknowledged that a claim against the State cannot be maintained without its consent, but noted that the complaint in intervention was directed against Apostol, not the Republic.
The Court found that Apostol had asserted ownership of the properties delivered to th...continue reading